The Dominance
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Editor
Maurits Dolmans
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contents
Editor’s Preface
��������������������������������������������������������������������������������������������������vii
Maurits Dolmans
Chapter 1
AUSTRALIA�������������������������������������������������������������������������������1
Ayman Guirguis, Richard Flitcroft and Jackie Mortensen
Chapter 2
Belgium��������������������������������������������������������������������������������21
Damien M B Gerard
Chapter 3
Brazil������������������������������������������������������������������������������������39
Ana Paula Martinez
Chapter 4
Canada���������������������������������������������������������������������������������53
Arlan Gates
Chapter 5
Denmark������������������������������������������������������������������������������69
Søren Zinck and Frederik André Bork
Chapter 6
European Union��������������������������������������������������������������80
Thomas Graf and Henry Mostyn
Chapter 7
France����������������������������������������������������������������������������������99
Antoine Winckler, François Brunet and Frédéric de Bure
Chapter 8
Germany����������������������������������������������������������������������������115
Stephan Barthelmess and Tilman Kuhn
Chapter 9
Iceland������������������������������������������������������������������������������129
Helga Melkorka Óttarsdóttir and Snorri Stefánsson
Chapter 10
India������������������������������������������������������������������������������������139
Anand S Pathak
iii
Contents
Chapter 11
Italy�������������������������������������������������������������������������������������153
Matteo Beretta and Gianluca Faella
Chapter 12
Japan������������������������������������������������������������������������������������170
Kozo Kawai, Ryutaro Nakayama, Madoka Shimada and Takahiro
Azuma
Chapter 13
Korea�����������������������������������������������������������������������������������185
Youngjin Jung
Chapter 14
Malaysia�����������������������������������������������������������������������������202
Tay Beng Chai and Lynette Yee Eun Ping
Chapter 15
Netherlands������������������������������������������������������������������212
Douwe Groenevelt and Erik Pijnacker Hordijk
Chapter 16
Poland�������������������������������������������������������������������������������229
Jarosław Sroczyński and Łukasz Wieczorek
Chapter 17
Portugal���������������������������������������������������������������������������244
Nuno Ruiz
Chapter 18
Romania�����������������������������������������������������������������������������253
Anca Buta Mușat
Chapter 19
Spain�������������������������������������������������������������������������������������262
Francisco Enrique González-Díaz and Ben Holles
Chapter 20
Sweden�������������������������������������������������������������������������������273
Ulf Öberg, Andreas Reindl and Mattias Schain
Chapter 21
Switzerland�������������������������������������������������������������������292
Nicolas Birkhäuser and Andreas D Blattmann
Chapter 22
Turkey��������������������������������������������������������������������������������308
Gönenç Gürkaynak
iv
Contents
Chapter 23
United Kingdom�����������������������������������������������������������319
Paul Gilbert
Chapter 24
United States�����������������������������������������������������������������333
Kenneth S Reinker, Daniel Culley and Morgan L Mulvenon
Appendix 1
about the authors���������������������������������������������������� 347
Appendix 2
Contributing Law Firms’ contact details�� 365
v
Editor’s Preface
This publication is a testament to the proliferation of abuse of dominance legislation
around the world. Its coverage considers legislative provisions that have, in the case of the
United States, been in existence since 1890, to some, in jurisdictions such as China and
India, that have been introduced in the past few years or, in Malaysia’s case, last year. This
diversity of jurisdictions has led to a multiplicity of differing approaches and indicates,
as underlined by the national and supra-national surveys contained in this book, the real
need for greater legal certainty and clarity in both the future drafting and application of
laws governing abuse of dominance.
The disparities in the approaches taken by different and even well-established
jurisdictions can be significant. As an example, a contrast may be drawn between the law
of the United States and the European Union.
In the United States, Section 2 of the Sherman Act1 is in certain respects being
narrowly construed and applied by the courts, the Department of Justice (most notably
through its Guidelines) and, to some extent, the Federal Trade Commission (‘FTC’).
This may be attributed to a wish to reduce the burdens of US litigation, in light of the
costs imposed by the discovery system and the risks created by trial by jury, awards of
treble damages, as well as the litigation incentives inherent in contingency fees and class
actions.
By contrast, the approach taken by the European Union in the application of
Article 102 of the Treaty of the Functioning of the European Union (‘TFEU’) goes
too far in the opposite direction. For much of the life of Article 102 TFEU and its
predecessors, the European Commission and courts have embraced a form-based
rather than effects-based approach. The high-water mark of this may be seen in the
1
15 USC Section 2.
vii
Editor’s Preface
Commission decisions and subsequent court judgments in British Airways2 and Tomra,3
where it was sufficient to show that the conduct in question was merely liable to affect
competition, rather than having to prove actual effects and harm to consumers. This
form-based application may stifle pro-competitive conduct, taking into account the
essentially political decision-making in large cases, the risk of confirmation bias (where
the investigator is the prosecutor, judge and executioner), the slow and therefore costly
procedure, the risk of high fines and opportunistic follow-on damage claims, and the
marginal judicial review of prohibition decisions by the General Court and the Court
of Justice of the European Union. The combination of these factors is a powerful
disincentive for a possibly dominant undertaking to engage in any competitive conduct
that may be found to constitute abuse.
Given the influence of European Union abuse of dominance law, particularly
on emerging jurisdictions such as India and China (where similar factors apply to an
even larger extent), the use of a form-based analysis may have a negative impact on the
development of the law far beyond Europe’s borders.
A happy medium or Mid-Atlantic point needs to be found between these divergent
approaches. The law of abuse of dominance in Europe (and all jurisdictions that emulate
Europe) needs to move away from the form-based approach that has characterised the
analysis of abuse of dominance in favour of an effects-based analysis. The institutional
groundwork for a turn towards the application of a more economic analysis may have
been put in place by the creation of the office of the Chief Competition Economist in
2003 and the publication of the ‘Guidance on the Commission’s Enforcement Priorities’.4
Subsequently, in the decisions of the European Commission and judgments of the
courts, there have been signs of an incipient analytic shift; both Microsoft5 and, more
recently, Post Danmark6 show a growing acceptance of the need for a more effects-based
consideration of the abuse of dominance. As the European Court of Justice commented
in Post Danmark:
[…] not every exclusionary effect is necessarily detrimental to competition. Competition on
the merits may, by definition, lead to the departure from the market or the marginalisation of
competitors that are less efficient and so less attractive to consumers from the point of view of,
among other things, price, choice, quality or innovation.7 […] in order to assess the existence
of anti-competitive effects […] it is necessary to consider whether that pricing policy, without
2
3
4
5
6
7
Case C-95/04 P, British Airways plc v. Commission (‘British Airways’), judgment of 15 March
2007.
Case C-549/10P, Tomra, judgment of 19 April 2012.
OJ, C45/7, 24 February 2009.
Case T-201/04, Microsoft Corporation v. Commission (‘Microsoft’), judgment of 17 September,
2007.
Case C-209/10 Post Danmark v. Konkurrencerådet (‘Post Danmark’), judgment of 27 March
2012. Note that this was the Grand Chamber of the Court.
Ibid., paragraph 22.
viii
Editor’s Preface
objective justification, produces an actual or likely exclusionary effect, to the detriment of
competition, and, thereby, of consumers’ interests.8
It is hoped that the change of tack signalled by Post Danmark will be continued in future
abuse of dominance cases. The forthcoming decision of the court in Intel should act as
a marker of the progress of this change, hopefully confirming the growing acceptance
and, indeed, necessity of the adoption of an effects-based analysis in the enforcement of
European abuse of dominance law. For those jurisdictions that have drawn heavily on
the European legal framework in the creation of their own systems for the regulation of
abuse of dominance, most notably India and China, further lessons concerning the need
to abandon the per se approach and adopt an effects-based approach should be taken
from the recent European experience.
On both sides of the Atlantic, the European and FTC Commissioners have, when
dealing with the practicalities of abuse of dominance enforcement, in some cases shown
a laudable willingness to find practical solutions in fast-moving markets. The growth, in
particular, of the innovative use of consent decrees in the United States and commitment
decisions within the European Union, is to be welcomed. These settlement tools create
advantages for both competition authorities and market parties in reducing not only the
regulatory and enforcement burden but in cutting the timelines for cases from up to 10
years (resulting in remedies that may be too late to keep pace with developments in the
market) to periods of months or a few years. At the same time, we cannot ignore the
fact that the use of such settlement procedures also brings some disadvantages for the
development of the law; in an area where there are limited numbers of decisions, a lack
of new precedents or guidance is of some concern.
As highlighted by the European Court of Justice in Alrosa,9 settlement procedures
may afford competition authorities a wide degree of discretion in the resolution of abuse
of dominance cases. Especially given the absence of any in-depth judicial analysis of
commitments, this discretion must be exercised with care and responsibility. The factors
mentioned above may drive the Commission into adopting adventurous and novel
interpretations of the law, and compel companies to agree to settlements to refrain from
energetic rivalry that could, in fact, harm the interest of consumers.
Despite the scope for a harmonisation of approaches, there will probably never
be total convergence between the law and practice governing the regulation of abuse
of dominance in the United States and the European Union or, more generally, on a
worldwide basis. There are some important differences between the relevant provisions of
US and EU law. As can be seen in the different analysis of the Rambus ‘patent trap’, the
respective concepts of ‘monopolisation’ (which does not require a dominant position at
the time the offensive conduct occurs) and ‘abuse’ (which requires a finding of dominance)
can lead to very different assessments of the same conduct.10 The total lack of a concept
of an exploitative abuse in US law is another fundamental difference. The purpose of
8
9
10
Ibid., paragraph 45.
Case C-441/07P, Commission v. Alrosa Company Limited (‘Alrosa’), judgment of 29 June 2010.
Rambus Inc v. FTC, 522 F.3d 456 (D.C. Cir 2008) and Case COMP/ 38.636 Rambus Inc.
ix
Editor’s Preface
this book, as shown by the contributions it contains, is to allow for the beginning of
an understanding of the differences and similarities, and their implications, between
laws governing unilateral conduct in some of the major competition jurisdictions of the
world.
In the coming year, there are likely to be further interesting case law developments,
notably from the technology and energy sectors, areas that have been the subject of
increased scrutiny by competition authorities. Of particular note will be the forthcoming
decisions from the European General Court in Intel 11 and of the European Commission
in Samsung12 and Motorola.13 More generally, both patent trolling and privateering are
likely to come under increased scrutiny from not only the US and EU competition
authorities but, probably, the competition authorities in many of the jurisdictions
analysed in this book. Watch this space.
I would like to thank all of the contributors for taking time away from their
busy practices to prepare their insightful and informative contributions to the inaugural
edition of The Dominance and Monopolies Review. I am personally grateful for the
invaluable assistance of my colleague Max Kaufman of the Brussels office. I look forward
to seeing what 2013 holds for future editions of this work.
Maurits Dolmans
Cleary Gottlieb Steen & Hamilton LLP
London
June 2013
11T-286/09 Intel v. Commission.
12
Case COMP/39.939 Samsung – Enforcement of UMTS standards essential patents.
13
Case COMP/39.985 Motorola – Enforcement of GPRS standard essential patents.
x
Chapter 17
Portugal
Nuno Ruiz1
IINTRODUCTION
Law 19/2012 (‘the Competition Law’), published in the Official Gazette of 8 May,
approved the new legal framework for competition, repealing Law 18/2003 of 11 June.
All decisions adopted by the Portuguese Competition Authority on abuses of dominant
position were, until now, grounded in Law 18/2003.
The Competition Law is also applicable to state-owned undertakings and to
undertakings to which the state has granted special or exclusive rights. Undertakings
that have been legally entrusted with the management of services of general economic
interest are subject to competition law to the extent that it does not create an obstacle to
their specific mission.
Article 11 of the Competition Law prohibits the abuse, by one or more
undertakings, of a dominant position in the domestic market or in a substantial part of it.
Article 11 gives a number of examples of abuses, including:
a
imposing, directly or indirectly, unfair purchase or selling prices or other unfair
trading conditions;
b
limiting production, markets or technical development to the detriment of
consumers;
c
applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
d
making the conclusion of contracts subject to acceptance by the other parties of
supplementary obligations, which, by their nature or according to commercial
usage, have no connection with the subject of such contracts; and
e
refusing access to a network or to other essential facilities.
1
Nuno Ruiz is a partner at Vieira de Almeida & Associados.
244
Portugal
Article 12 of the Competition Law also prohibits the abuse of economic dependence to
the extent that such a practice affects the way the market or the competition operates.
This is the case where one or more undertakings abuse the economic dependence under
which any of their suppliers or customers may find themselves as a result of the fact that
an equivalent alternative is not available. The Competition Authority never applied this
rule.
The basic rule on the prohibition of the abuse of dominant position remains
very much the same; however, the new Competition Law significantly enhanced the
Competition Authority’s capacity for action, strengthening its powers of inspection,
sanction and supervision.
In performing its duties, the Competition Authority is guided by the public interest
in the promotion and defence of competition and may therefore establish its priorities
accordingly regarding the matters that it is called upon to investigate. The Competition
Authority may act on its own initiative or upon complaint. However, it only has the duty
to open infringement proceedings whenever the public interest is at stake.
The Competition Authority has announced its priorities for 2013. Among them
is combatting the abuse of dominant positions whatever the form they take, since they
affect the capacity of undertakings to compete and, ultimately, have an impact on
effective competition.
In this respect the Competition Authority acknowledged that its decisions in
cases of abuse of a dominant position have not been upheld by the courts ‘due to the
economic complexity of argumentation needed for the burden of proof required from
the Competition Authority’ and that it should reassess its approach to these types of
cases, ‘both in terms of obtaining the expert evidence that will stand up in court and of
requesting cooperation from the European Commission as amicus curiae’.
Until now the Competition Authority has issued no formal guidance on the
application of Article 11 of the Competition Law. It has stated, however, that national
rules on the abuse of a dominant position will be applied in accordance with the European
Commission decisions and with the rulings of the Court of Justice.
It is interesting to note that in all the decisions taken by the Competition
Authority the abuses were considered to be an infringement of the Competition Law
and of Article 102 TFEU. Both the concept of dominance and the concept of abuse were
widely discussed between the Authority and the defendants, in light of the administrative
practice of the European Commission and of the Court of Justice case law. The same
approach has been followed by national courts when reviewing the Competition
Authority decisions.
II
YEAR IN REVIEW
In about 10 years of activity the Competition Authority has adopted five decisions
on abuse of a dominant position, all under Law 18/2003 (former competition law).
Three of these cases were against Portugal Telecom and another was against the Order of
Chartered Accountants. In March 2013, in the presentation of the balance of its term
before Parliament, the President of the Competition Authority mentioned the existence
of a fifth decision finding an abuse of a dominant position; however, this decision has
not yet been made public.
245
Portugal
The first case of abuse of a dominant position led to the imposition of a €38
million fine on Portugal Telecom (‘the ducts case’). The Competition Authority concluded
that the incumbent operator unjustifiably refused access by competitors TVTEL and
Cabovisão to its underground ducts network. The Competition Authority found that the
ductwork of Portugal Telecom was an essential facility for the purpose of passing cables
and electronic communications networks and that, by refusing access to this facility,
Portugal Telecom restricted competition in downstream markets, in particular in the
markets for pay-TV, broadband internet access and fixed telephony.
Portugal Telecom appealed to the Lisbon Commerce Court, which acquitted the
company. The Lisbon Court of Appeal confirmed the judgment of the Lisbon Commerce
Court. Following closely the Lisbon Commerce Court decision, the Lisbon Court of
Appeal concluded that there was no evidence that the sections of Portugal Telecom’s duct
system to which TVTEL and Cabovisão were not given access were an essential facility
for the supply of pay-TV, broadband internet access and fixed telephony services. The
Lisbon Court of Appeal also concluded that even if the duct sections in question had
been found to be indispensable for the supply of the above-mentioned services, there was
no evidence that the refusals to grant access thereto were unjustified or discriminatory.
The Lisbon Court of Appeal confirmed that an undertaking that is dominant in
the market for certain infrastructures used for the supply of telecommunications services
has the right to reserve those infrastructures to it, provided that they can be replicated or
as long as there are other alternatives for the supply of such services.
The second case of abuse of a dominant position was related to the behaviour of
Portugal Telecom in the wholesale markets for leased lines, in particular to the system
of discounts applied by the company in the provision of these services (‘the leased lines
case’). In September 2008 the Competition Authority imposed a €2.1 million fine on
Portugal Telecom.
The Competition Authority found that in 2003 and 2004, Portugal Telecom
was the sole supplier of wholesale services of terminating segments and analogue trunk
segments of leased lines, and that in the wholesale provision of digital trunk segments its
market share was always above 86 per cent. As a consequence, Portugal Telecom’s offer
in the wholesale leased lines markets was indispensable for the provision of electronic
communications services at the retail level.
According to the Competition Authority, Portugal Telecom had systematically
applied discriminatory conditions to equivalent transactions thereby restricting
competition by preventing other operators from competing on equal terms, not only
in the markets for leased lines but also in the markets that use leased lines as an input
for the provision of electronic communications services (for instance fixed telephony,
broadband internet access or mobile communications services, among others).
Portugal Telecom appealed to the Lisbon Commerce Court also in this case and
again the Lisbon Commerce Court acquitted the company. The Court concluded that
the different discount levels applied to different volumes of sales and that, therefore,
the transactions to which the discounts applied were not comparable with each other.
Moreover, the grid of rebates was not atypical, and the Competition Authority did not
provide evidence that the system was not objectively justified, that it could not have a
transaction-specific cost justification and that it was aimed at restricting competition.
246
Portugal
The third case of abuse of a dominant position investigated by the Competition
Authority also concerned Portugal Telecom (‘the broadband case’). In February 2009, the
Competition Authority considered that there had been an abuse of a dominant position
by the companies Portugal Telecom and ZON (a company providing cable TV and
broadband internet access).
When the conducts in question took place (2002 and 2003) ZON was part of
the Portugal Telecom Group and was the main pay-TV operator. The Portugal Telecom
Group was dominant in the wholesale and retail markets for broadband internet access.
In the wholesale market, the Portugal Telecom Group was the sole provider of services
to third parties. Thus, Portugal Telecom’s wholesale offer, known as ‘Rede ADSL PT’,
was indispensable for the provision of broadband internet access and other electronic
communications services by competing operators. In the retail market for broadband
internet access, the companies of the Portugal Telecom Group held a market share above
70 per cent.
The Competition Authority concluded that Portugal Telecom had restricted
competition by imposing artificial prices, margin squeeze and discrimination. The
abuse would have consisted in defining and applying wholesale tariffs that did not allow
competitors to offer retail services in a profitable manner. In addition, through the system
of discounts that was included in its wholesale offer, Portugal Telecom systematically
applied dissimilar conditions to equivalent transactions, favouring the Portugal Telecom
Group companies. According to the Competition Authority, Portugal Telecom’s conduct
would have given rise to a reduction of the retail market share of its competitors, to the
market exit of an operator and to another operator suspending its offer to any new clients.
As a consequence, the Competition Authority decided to impose a €45.016 million fine
on Portugal Telecom and a €8.046 million fine on ZON, in the total amount of €53.062
million.
Portugal Telecom appealed to the Lisbon Commerce Court. The company
argued that the wholesale offer was defined and launched by imperative of the regulatory
framework then in force, having been authorised and supervised since the beginning
by the telecoms regulator, ICP-ANACOM. Portugal Telecom considered that, in these
circumstances, it should not be condemned by the Competition Authority based on
behaviour that was timely validated by the competent regulatory authority. Its wholesale
prices were cost-oriented and could hardly be lower. On the other side, retail prices
applied by Portugal Telecom were market prices, consequently optimal for the consumer
and compatible with those applied by other competitors that rendered the same services
based on their own network infrastructure. Portugal Telecom was not a price setter at
the retail level.
As regards the discrimination and margin squeeze allegation, Portugal Telecom
also claimed that the Competition Authority had not proved that the discount conditions
of the wholesale offer had no objective justification and further argued that the margin
squeeze test had been inadequately interpreted and applied, since the ‘as efficient
competitor test’ had not been properly applied. As a matter of fact, when establishing the
existence of margin squeeze, the Competition Authority took into account not Portugal
Telecom’s costs but the costs of its closest competitor.
247
Portugal
The courts never settled this case. The time limit of the prescription period has
been reached pending the appeal before the Lisbon Commerce Court, and the court did
not rule.
In the last known decision of the Competition Authority on abuse of dominant
position, issued in May 2010, the Order of Chartered Accountants (‘OTOC’) was
sentenced to pay a fine of €229,300 for restrictive practices in the market of compulsory
training for chartered accountants (‘the OTOC case’). OTOC had published a Training
Regulation through which it artificially segmented the market of compulsory training,
reserving for itself a third of that market and stipulating criteria for the admission of
other training entities and for the approval of their training activities.
The Competition Authority found that, by establishing a Training Regulation
that had as its object and effect the restriction of competition in the market of specialised
training as defined by OTOC itself, OTOC infringed the prohibition of decisions by
associations of undertakings that restrict competition (Article 4 of the Competition Law,
similar to Article 101 TFEU).
The Competition Authority considered that OTOC, as the regulator of the
chartered accountant profession, simultaneously abused its dominant position on the
market that OTOC itself created, deciding which competitors could enter such market,
charging fees for both market access and for the exercise of the profession concerned. The
Competition Authority determined the cessation of these practices and their effects upon
the application of a periodic penalty payment of €500 per day of delay in complying
with the decision.
OTOC decided to bring proceedings against the authority’s decision. The Lisbon
Commerce Court has, however, sustained the Competition Authority decision. OTOC
then appealed to the Lisbon Court of Appeal, which referred several interpretation
questions to the Court of Justice of the European Union. These issues were clarified in its
judgment of 28 February 2013 (see Case C 1/12). The Court of Justice ruled, however,
on the basis of Article 101(1) TFEU. The judgment of the Lisbon Court of Appeal is
still awaited and it is expected to confirm the Competition Authority decision and the
Lisbon Commerce Court ruling. The existence of abuse may, however, not be upheld.
Finally, it is important to mention two additional cases of alleged abuse of a
dominant position that have not ended in the adoption of a condemnation decision.
In 2009 the Competition Authority ordered the undertaking Sugalidal to put
an end to the anti-competitive practices included in its contracts with tomato growers
(‘the Sugalidal case’). Sugalidal is a manufacturer of tomato products and the practices
analysed concerned the contracts signed in each season with the tomato growers and the
tomato growers’ organisations.
Following the opening of the case and the competition-law concerns expressed by
the Competition Authority, Sugalidal submitted the commitment to put an end to the
anti-competitive practices in the market of tomatoes for industrial use, in particular to
the obligation to use Heinz variety seeds in their production. This variety was marketed
in Portugal exclusively by another undertaking part of the group to which Sugalidal
belongs.
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After analysis, the Competition Authority concluded that there was an abuse
of a dominant position by Sugalidal, in the form of tying purchases, which was not
justified by the efficiency gains. The abuse of the dominant position consisted in a tied
sales practice by means of the processing contracts with the growers and the growers’
organisations making the acquisition of fresh tomatoes (the tying product) conditional
on the use of Heinz seeds in their production (the tied product).
Following the Competition Authority intervention, the defendant undertook to
eliminate the contract clause on the preference for tomatoes of a Heinz variety seeds, to
adapt the contract to the imminent merger between Sugalidal with another undertaking
and to issue a circular to the growers’ organisations, informing them of the elimination
of the tying contract clause.
In light of these guarantees, the Competition Authority has decided to drop the
case for as long as the undertaking complies with the commitments.
The second case of alleged abuse that has not been the subject matter of a decision
so far relates to the prices charged by mobile operators for the origination of telephone
calls to special services and non-geographic numbers (‘the origination prices case’).
In January 2012 the Competition Authority informed all three Portuguese mobile
operators that it had concluded that they were charging excessive prices for originating
calls in their one networks. Each one of them was considered to have a monopoly power
in originating the calls and the prices charged were considered to be excessive taking into
account the relevant costs and the prices applicable to similar services.
The Competition Authority gave the mobile operators until the end of July 2012
to adjust their prices in order not to face infringement procedures. All of them rebutted
the authority’s allegations but ultimately reduced their origination prices.
III
MARKET DEFINITION AND MARKET POWER
Both the Competition Authority and the Portuguese courts use the same criteria as the
European Commission and European Court of Justice when dealing with concepts such
as ‘relevant market’, ‘dominant position’, ‘unilateral conduct’ and ‘collective dominance’.
The approach to market definition and to market power may be more or less economicsbased depending on the requirements of the case.
As a general policy statement the Competition Authority expressed the view that,
in order to determine the existence of an abuse of dominant position, it is necessary, first,
to determine whether the allegedly dominant undertaking holds a dominant position
in a certain relevant market. This requires the identification of the relevant product (or
service) and the geographic markets.
For the Competition Authority an undertaking may be in a dominant position
when, due to its position of economic strength, it has the ability to behave to an appreciable
extent independently of its competitors, its suppliers and its clients. This position may
be due to the characteristics of the undertaking (its market share, financial capacity or
vertical integration) or to market characteristics (barriers to entry or expansion, network
effects or legal obstacles to entry).
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IVABUSE
iOverview
The Competition Authority broadly defines the abuse of a dominant position as an
unlawful exploitation by one or more undertakings of their market power having an
anti-competitive object or effect and resulting in harm to customers and the exclusion
of competitors.
Since the Competition Law does not provide an exhaustive list of abuses the
Competition Authority tends to have an effects-based approach and not to revert to per
se abuses. This allows for the recognition of the existence of less common or sui generis
abuses in some decisions (see the OTOC case, supra). However the existence of per se
abuses is not excluded.
In theory the Competition Authority acknowledges the distinction between
an abusive conduct and competition on the merits but, in practical terms, it deviates
sometimes from such distinction (see the ducts and broadband cases, supra). The courts
have been more consistent in establishing a frontier between the abuse of market power
and competition on the merits (see the ducts case, supra).
For the Competition Authority, holding a dominant position confers on the
undertaking concerned a special responsibility, the scope of which must be considered in
light of the case’s specific circumstances.
Therefore, conduct that would be deemed lawful when carried out by a nondominant undertaking may constitute an infringement when adopted by a dominant
undertaking.
ii
Exclusionary abuses
As already mentioned the Competition Authority has dealt with exclusionary abuses in
some cases. The ducts case concerned a refusal to deal, in particular, a refusal of access to
essential facilities. The leased lines and broadband cases concerned margin squeeze and
predation. The abuse identified in the OTOC case could be viewed as exclusive dealing.
Leveraging was the subject matter of the Sugalidal case.
iiiDiscrimination
Discrimination was discussed mainly in two cases: the leased lines and the broadband cases
(see supra). In both decisions the Competition Authority took the view that, as a rule,
volume rebates should not be considered as a form of unlawfully restricting competition.
However, the issue of discriminatory pricing was raised taking in consideration the
circumstances of the case: the dominant firm was the sole beneficiary of the higher
discounts.
iv
Exploitative abuses
Exploitative abuses were discussed in the origination prices case (see supra). The
investigation and the warning letter sent to all three mobile operators in Portugal proved
that the Competition Authority does not set aside the possibility of intervening in
situations of excessive pricing.
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V
REMEDIES AND SANCTIONS
iSanctions
A fine of up to 10 per cent of the turnover of the year immediately preceding the final
decision by the Competition Authority may be imposed in case of abuse of a dominant
position. Daily penalty payments may also be imposed in case of non-compliance with
a Competition Authority decision determining the adoption of any specific measures or
remedies (see the Sugalidal case, supra).
ii
Behavioural remedies
Infringement decisions often impose behavioural measures appropriate to bring the
infringement to an end and to avoid persisting violations of competition rules.
iii
Structural remedies
Infringement decisions can impose structural measures necessary for halting the
prohibited practices or their effects. According to the Competition Law structural
measures can only be imposed when there is no behavioural remedy that would be
equally effective or, should it exist, it would be more onerous for the party concerned
than the structural measures themselves. The Competition Authority has to date never
imposed structural measures.
VIPROCEDURE
The Competition Authority may act on its own initiative or upon complaint. Apart from
informal contacts there are no procedures aimed at ensuring that undertakings obtain
guidance on individual cases.
Complaints must be presented according to a specific form approved by the
Competition Authority. If the Competition Authority deems that a complaint is either
groundless or does not fall within its competition policy priorities, it must inform the
complainant. The same applies whenever, once an investigation has been initiated,
the Competition Authority concludes that there is no reasonable likelihood that an
infringement decision will be adopted. In both cases, the complainant may present its
comments and appeal against the Competition Authority’s decision to drop the case.
In case the Competition Authority opens an investigation and further decides
to pursue the case it must issue a statement of objections and give the defendant the
opportunity to express its views, to produce exculpatory evidence and to request for
additional investigation to be conducted.
In infringement proceedings the burden of proof of any justification lies with the
undertakings or associations of undertakings accused of breach of competition law.
As a rule, inquiries should be concluded within 18 months and, in the event of
a statement of objections, the final decision should be adopted within 12 months of its
issuance.
The Competition Law allows the defendant to negotiate with the Competition
Authority with a view to defining the conditions necessary to closing the investigation
and to obtain a fine reduction, upon condition of acknowledging liability for the
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infringement. The Competition Law also allows the defendant to start negotiations with
a view to closing the investigation without acknowledging liability, upon commitment
to cease the practices that were the object of complaint.
In the Sugalidal and origination prices cases the Competition Authority has preferred
to obtain a swift commitment related to the change of behaviour of the undertakings
rather than to pursue a lengthy investigation that would lead to the application of a
penalty but would be unable to quickly solve the competition problem. Under the new
Competition Law it is expected that such arrangements will become more frequent.
Whenever investigations indicate that an abuse is on the point of doing serious
and irreparable harm to competition, the Competition Authority can, at any phase in the
proceedings, issue an interim measure ordering the undertaking to immediately suspend
the practice or to adopt any other temporary measure needed for restoring competition,
or required for the final decision on the case to be effective. These urgent measures may
remain in force for a period of no longer than 90 days, unless an extension is granted,
duly substantiated, for no longer than 180 days.
VII
PRIVATE ENFORCEMENT
In Portugal private antitrust enforcement plays a modest role. Damages deriving from
abuse of a dominant position may be recovered in civil courts. Civil courts are also
competent to decide on whether interim relief should be granted and on the type of
conduct that should be expected from a dominant firm. Whether collective actions are
available remains to be settled.
There are no special rules for calculating the compensation for damages deriving
from the abusive conduct. Compensation is aimed at putting the plaintiff in the position
he or she would have been in had the tort not taken place.
The decision of the Competition Authority in the broadband case has been used
in two follow-on actions for damages still pending before the Lisbon civil courts. Civil
courts are, however, not bound by the Competition Authority decision, even in cases
where it has been reviewed and confirmed by competent courts (now the special court
for competition and regulation matters).
VIII FUTURE DEVELOPMENTS
The Competition Law was updated in 2012. There are a number of unsettled points of
law that still require clarification. This clarification is not to be found in a new revised
law. In the near future the Competition Tribunal and the civil courts are expected to play
an important role in ensuring that questions get proper answers.
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Appendix 1
about the authors
Nuno Ruiz
Vieira de Almeida & Associados
Nuno Ruiz was a legal adviser to the European Law Department of the Ministry of
Justice (1981 to 1982); assistant professor of international economic relations and
Community Law at the University of Lisbon, Faculty of Law (1982 to 1997); assistant
professor of competition law at the Institute for European Studies of the Portuguese
Catholic University (1983 to 1992); a member of the Portuguese Competition Council
(1984 to 1998); and assistant professor of competition law at the European Institute of
the University of Lisbon, Faculty of Law (1985 to 1999). He has also been a legal adviser
to the European Commission and to the United Nations in several programmes for the
development of competition law in Latin America (1998 to 2001). He was a partner at
Botelho Moniz, Magalhães Cardoso & Ruiz (1987 to 1999) and at PMBGR (1999 to
2001), and joined Vieira de Almeida & Associados in 2002 as partner in charge of the
EU and competition law practice.
Vieira de Almeida & Associados
Av. Duarte Pacheco, 26,
1070-110 Lisbon
Portugal
Tel: +351 21 311 3400
Fax: +351 21 311 3406
[email protected]
www.vda.pt
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